Beijing Hits 17-Year Low in US Debt Holdings as Central Bank Pivots to Gold

China has accelerated its departure from the US Treasury market, reducing its holdings of American government debt to the lowest levels seen since the 2008-2009 global financial crisis. According to the latest Treasury International Capital (TIC) data, Beijing’s stockpile of US Treasuries has dipped toward the $750 billion mark, continuing a multi-year divestment trend that shows no signs of reversing.

This shift marks a significant realignment of the world’s second-largest economy’s foreign exchange reserves, as the People’s Bank of China (PBOC) increasingly swaps dollar-denominated assets for physical gold and other “hard” alternatives.

The Retreat from the Greenback

The sell-off has been steady but deliberate. At its peak in 2013, China held over $1.3 trillion in US debt, acting as a primary financier for American government spending. Fast forward to early 2026, and that figure has nearly halved. Analysts point to a combination of factors driving the exit, primarily the “weaponization” of the US dollar in global sanctions regimes and a desire to shield the Chinese economy from American fiscal volatility.

By trimming its exposure to the US Treasury market, Beijing is effectively reducing the leverage Washington holds over its financial system. This “de-risking” strategy has gained momentum following the freezing of Russia’s foreign reserves in 2022, which served as a wake-up call for several major emerging economies.

The Massive Pivot to Gold

As the dollar holdings shrink, China’s gold hunger is reaching record levels. The PBOC has been on a persistent buying spree, adding to its sovereign gold reserves for nearly 20 consecutive months. This accumulation is part of a broader “de-dollarization” effort aimed at making the Yuan a more credible international currency backed by tangible assets.

“Beijing is no longer comfortable keeping all its eggs in a paper basket that someone else controls,” noted a senior trade economist in Shanghai. “The move to gold is about sovereignty and long-term insurance against a fractured global financial order.”

Impacts on the US Treasury Market

The withdrawal of such a massive institutional buyer comes at a sensitive time for the US Department of the Treasury. With the US federal deficit continuing to climb, Washington needs a steady stream of buyers for its debt. While domestic buyers and other allies like Japan and the UK have picked up some of the slack, the loss of China’s massive appetite has put upward pressure on yields, making it more expensive for the US government to borrow money.

Economists also note that China is shifting some of its dollar holdings into “hidden” reserves—assets held via offshore custodians in Belgium or Luxembourg—to make their movements less visible to US regulators. However, the overall trend remains clear: a strategic exit from the dollar-centric system.

Regional Context and the Global South

China isn’t alone in this shift. Several members of the BRICS+ bloc are similarly diversifying their reserves. This collective movement suggests a fundamental change in how global trade is settled. While the US dollar remains the dominant reserve currency for now, China’s 17-year low in debt holdings signals that the era of the “unipolar dollar” is facing its most significant challenge in decades.

The PBOC has indicated that it will continue to “optimize” its reserve structure, a term widely understood in financial circles as a euphemism for further selling of US Treasuries in favor of gold, silver, and strategic commodity stockpiles.